Punjab-Haryana High Court
Curo India Pvt. Ltd vs Pvr Ltd on 26 February, 2013
Author: Jasbir Singh
Bench: Jasbir Singh
In the High Court of Punjab and Haryana, at Chandigarh
Arbitration Case No. 29 of 2012 (O&M)
Date of Decision: 26.2.2013
Curo India Pvt. Ltd.
... Petitioner
Versus
PVR Ltd.
... Respondent
CORAM: Hon'ble Mr. Justice Jasbir Singh.
Present: Mr. C.L.Sharma, Advocate for the petitioner.
Mr. Rajiv Atma Ram, Senior Advocate with Mr. Tanuj Khurana and Mr. Jai Singh Brar, Advocates, with the respondent.
Jasbir Singh, Judge Civil Misc. No. 4571-CII of 2013 Civil Misc. Application is allowed.
Additional Affidavit of Anil Kumar Sharma is taken on record. Arbitration Case No. 29 of 2012 Petitioner has filed this application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "1996 Act") for appointment of an Arbitrator to settle dispute between the parties. As per case of the petitioner, it has developed a "Mall" at Ludhiana. A shop (Food Court), on second floor of the aforementioned Mall, was leased out vide lease deed dated 12.9.2007 (Annexure P2) to the respondent. As per admitted facts on record, the shop was leased Arbitration Case No. 29 of 2012 (O&M) 2 out for a period of nine years. The above lease deed is registrable as per the provisions of Transfer of Property Act, 1882 (hereinafter referred to as "1882 Act") and Registration Act, 1908 (hereinafter referred to as "1908 Act"). Admittedly, lease was not registered, as required.
A dispute arose between the parties. As per terms & conditions of the lease deed, there is a provision to settle dispute between the parties through amicable means, if those efforts fail, then through the process of arbitration. Clause 7(b) of the lease deed reads thus:-
"b) All disputes controversies and difference of opinion arising out of or in connection with this Agreement or for the breach hereof which cannot be settled amicably by the parties hereto shall be settled by arbitration in accordance with the Indian Arbitration and Conciliation Act, 1996 by the sole arbitrator to be appointed by mutual consent, failing which by the Hon'ble High Court of Punjab and Haryana. The parties shall appoint/take steps to appoint the sole arbitrator within 15 days of receiving a notice from the other party in accordance with clause 7(a) above. The venue of arbitration shall be New Delhi."
The dispute exist between the parties regarding payment of lease amount by the respondent to the petitioner. It is grievance of the petitioner that lease amount to the extent of ` 4,52,88,360 has not been paid. When request of the petitioner, to the respondent, to appoint an Arbitrator, did not yield any result, this application was filed. Arbitration Case No. 29 of 2012 (O&M) 3
Upon notice, reply has been filed, wherein execution of the lease deed is admitted, however, it is stated that the premises in dispute was vacated by the respondent and possession thereof was handed over to the petitioner way-back in the year 2009. It is further stated that the lease deed dated 12.9.2007 is not properly stamped and for want of registration, its provisions cannot be acted upon. It is specifically stated that in terms of Clause 7(b) of the lease deed, reproduced above, an Arbitrator cannot be appointed.
At the time of arguments, counsel for the respondent has reiterated objections, as mentioned above and to support his contention that an arbitrator cannot be appointed in this case, reliance has been placed upon a judgment of the Supreme Court in M/s SMS Tea Estates Pvt. Ltd. v. M/s Chandmari Tea Co. Pvt. Ltd. (Civil Appeal No. 5820 of 2011, decided on 20.7.2011). To the contrary, it is stated by counsel for the petitioner that Clause 7 of the lease deed is an independent clause and in terms of the provisions of Section 16 of the 1996 Act, an Arbitrator can be appointed.
As per facts on record, this application is bound to fail. It is an admitted fact that lease deed dated 12.9.2007 is compulsorily registrable document but it is not so registered. Clause 7(b) of the lease deed provided that all disputes, controversies and difference of opinion arising out of or in connection with the lease agreement or for breach thereof, which cannot be settled amicably by the parties, shall be settled by arbitration in accordance with the provisions of the 1996 Act.
As per the terms & conditions of the lease deed, the above Arbitration Case No. 29 of 2012 (O&M) 4 said provision do not provide for settlement of any collateral dispute between the parties through arbitration. The demised premises already stood vacated and the dispute is only with regard to alleged non- payment of lease amount by the respondent. To prove above fact that the amount of rent is due, reference is found to be made to the provisions of the lease deed. However, in view of the provisions of Section 49 of the 1908 Act, it is not possible. This provision refers to effects of non-registration of a document, which requires to be registered reads thus:-
"49. Effect of non-registration of documents required to be Registered.- No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall--
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting
such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) as evidence of any collateral transaction not required to be effected by registered instrument." Arbitration Case No. 29 of 2012 (O&M) 5
It is specifically provided that a compulsorily registrable document, if not registered, it will not affect the immovable property in any manner which is subject matter of that document. The document cannot be received as evidence of any transaction affecting the immovable property, except for two limited purposes i.e. the said document can be put as evidence of a contract in a suit for specific performance and secondly to prove any collateral transaction which, by itself, was not required to be effected by the document in question.
Similar dispute came up before the Supreme Court, that if any document, which is compulsorily registrable and is not registered, what will be the effect of an arbitration clause existing therein. The Supreme Court after analyzing the provisions of Section 107 of the 1882 Act and Section 49 of the 1908 Act, came to a conclusion that the arbitration clause is an independent clause and it can be acted upon and enforced for the purpose of resolution of the dispute referred for arbitration. It was observed as under:-
"(iv) Once the document is found to be duly
stamped, the court shall proceed to consider
whether the document is compulsorily registrable. If the document is found to be not compulsorily registrable, the court can act upon the arbitration agreement, without any impediment.
(v) If the document is not registered, but is
compulsorily registrable, having regard to
section 16(1)(a) of the Act, the court can
Arbitration Case No. 29 of 2012 (O&M) 6
de-link the arbitration agreement from the main
document, as an agreement independent of the other terms of the document, even if the document itself cannot in any way affect the property or cannot be received as evidence of any transaction affecting such property. The only exception is where the respondent in the application demonstrates that the arbitration agreement is also void and unenforceable, as pointed out in para 8 above. If the respondent raises any objection that the arbitration agreement was invalid, the court will consider the said objection before proceeding to appoint an arbitrator.
(vi) Where the document is compulsorily registrable, but is not registered, but the arbitration agreement is valid and separable, what is required to be borne in mind is that the Arbitrator appointed in such a matter cannot rely upon the unregistered instrument except for two purposes, that is (a) as evidence of contract in a claim for specific performance and (b) as evidence of any collateral transaction which does not require registration." Thereafter, taking note of the terms & conditions of the arbitration clause, in that case, it was said that for non registration of the lease deed, it cannot be referred in evidence and as such, appointment of an Arbitration Case No. 29 of 2012 (O&M) 7 Arbitrator would be a futile exercise. Prayer for appointment of an Arbitrator was rejected.
Same is the situation in the present case. The alleged dispute is with regard to non-payment of lease amount. Clause 7 of the lease deed, in this case, is of limited scope. Through arbitration, it provides settlement of all disputes, controversies and difference of opinion arising out of or in connection with agreement or any breach thereof. It does not provide for settlement of any other dispute through arbitration. The scope is limited and restricted. No doubt an Arbitrator can be appointed in this case but for want of registration of the lease deed, he cannot look into its contents and the Arbitrator cannot proceed further. Then why to make a futile exercise.
In view of the facts, mentioned above, this application fails and is hereby dismissed.
(Jasbir Singh) Judge February 26, 2013 "DK"